How to Learn Stock Market Charts
Learning stock market charts can help investors involved with the stock market to better understand the movements of a particular stock. Due to the emergence of online trading and investing via the Internet it is now possible to obtain free stock market charts to view at your leisure. However, most people who take the time to learn stock market charts are actively involved in the stock market on a daily or weekly basis. Learning stock market charts is a great way for anyone with a stock portfolio of any size to master the intricacies of the stock market.
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Instructions
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Locate the stock symbols of the companies you are investigating. Knowing the location of the stock symbol (normally on the top left hand corner of a stock chart) will allow you to quickly identify the stock with which you are dealing. Familiarize yourself with all of the symbols which are a part of your stock portfolio by committing them to memory, or simply have them printed out and placed in an area where they can easily be seen.
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Read the high and low price points of the stock. Understanding the high and low price of your stock is crucial when it comes to reading stock charts. Viewing the high and low of the stock will let you see the highest price that stock reached, and the lowest price which the stock reached over a given period of time. Most online charts give the option to show different periods of time, from one day to a year or more.
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Find the moving average. A moving average tracks the movement of the stock during a particular time frame. Comprehend that you can track the movement of a stock chart over a 30 or 90 day time frame.
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Determine the stock volume. Volume simply means the number of people that were trading the stock on any given day. The volume is usually found beneath the price graph. Track the volume in days, months or weeks by referring to the dates on the chart. A high volume indicates a lot of transactions taking place on that day, which usually moves the stock significantly up or down.
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Analyze trends. Know that when the price of a stock market chart is trending in an upward direction, the price is likely to go higher due to trading momentum. Similarly, stocks that are moving in a downward direction will tend to keep moving in that direction. Observe which direction the stock chart you are reading is moving. If the price is moving toward the top right corner of the chart, the stock is trending up. If the stock price is moving in the direction of the lower right corner of the chart, the stock is trending in a downward direction.
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Understand support and resistance levels. Support refers to the lowest point a stock has a tendency to reach and then rebound in an upward direction. Resistance is the point a stock will normally reach and then seem to bounce off that price level and move in a downward direction.
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Tips & Warnings
• Stock market investing is extremely risky, so only trade money which you are willing to lose.
References
- Photo Credit stock market analysis screenshot image by .shock from Fotolia.com
